Retail investor Paul and family are using investment funds to finance their future
Thursday 22 Nov 2018 Author: Tom Sieber

Investing is a family affair for Paul from South Cheshire who is putting his money to work along with wife Marie and 10-year-old son James to fund what he calls ‘proper life events’.

Completed by two-year-old spaniel Twix, the family are currently sitting on an investment portfolio worth a combined £310,000.

‘It’s about retirement planning for myself and my wife and for saving for the future, for our son James, university, housing, pensions,’ Paul says, who like his wife only began his investment journey in earnest in his late 30s. Both are them are now in their late 40s.

The programme director for an IT firm adds: ‘the approach for all investments is long-term growth, a pension for myself and Marie, and to give James as much of a “boost up” as possible before he is old enough to take charge of his own investments.’

INVESTING TAX EFFICIENTLY

Both Paul and his wife have individual ISAs and SIPPs with old occupational cash purchase pensions which have been transferred into SIPPs in all but one case.

Their experience in needing to make their own provision for retirement reflects the challenge facing their generation. ‘No nice final salary schemes in our universe I’m afraid,’ Paul adds.

He is a big proponent of not just Junior ISAs but also the Junior SIPP. ‘People don’t seem to know that if you have a SIPP for a child the Government will contribute to it in the same way
as for an adult. They may have to wait a long time, but the “free” money cannot be ignored, right?’

Paul says he invests through these vehicles for their tax efficiency with the ISAs providing an easily accessible source of ‘emergency or life event’ assets which can be liquidated when required.

‘I do have a worry about
the Government fiddling with the rules (on pensions) over time’, he says. ‘But as there is nothing I can do about that, it does not keep me awake at night.’

FOCUSED ON FUNDS

For the most part Paul invests in a collection of unit trusts, concentrated on the accumulation version where cash from dividends is automatically rolled up into more fund units.

The main exception is a single retail corporate bond that in Paul’s words is ‘just paying too much interest for it to be sold away’.

Paul says: ‘In the past I’ve tried individual shares, ETFs (exchange-traded funds), retail bonds, investment trusts, warrants, PIBs (permanent interest-bearing shares), everything you can imagine. What I’ve learnt is that you can’t guess or predict the market so it’s best to spread your savings around to minimise risk’.

He considers funds useful for this reason as they help with diversification and ‘you don’t have to worry about dividend re-investment or looking across your weighting or other complicated methods… it’s all done for you’.

He adds: ‘I had massive fails with Telewest in the tech boom in 2000/01 and after I had learnt the lesson about single company equity investment in high-risk high-growth areas. I failed again by having “safe” slow and sensible bank shares in my portfolio eight years later in 2008. I lost 85% on Telewest and 50% of my investment on the banks.’

Paul says these ‘tough experiences’ mean he plans to adopt a buy and hold approach, sticking with the funds in which he is already invested.

A CLOSER LOOK AT THE PORTFOLIO

His portfolio includes Vanguard’s range of LifeStrategy funds as well as iShares Global Property (B670Q95), BlackRock Natural Resources (B46KYQ5), Vanguard US Equity Index (B5B71Q7) and investment trust Scottish Mortgage (SMT) where he makes use of a dividend reinvestment plan.

The low-cost LifeStrategy funds provide diversified global exposure to bonds and shares.

He describes BlackRock Natural Resources as a conviction play ‘waiting on the next commodities super-cycle’, while the property fund provides exposure to an asset which, in his view, should be uncorrelated to equities.

On Scottish Mortgage, his other conviction selection, he says: ‘l am in technology as a career, so it was nice to find a fund I empathised with. It’s not based on fashion, has low charges for an active fund, and a reasonable track record. I like their “long termism”; James could be invested in this product for the next 40-odd years.’


WOULD YOU LIKE TO FEATURE AS A CASE STUDY IN SHARES?

We are looking for individuals or couples who can discuss their experience with investing and some details about their portfolios.

Anyone interested should email editorial@sharesmagazine.co.uk with ‘case study’ in the subject line.

Please note, we do not provide financial advice and we are unable to comment on the suitability of any investments you have made. If you’re unsure please consult a suitably qualified financial adviser.

‹ Previous2018-11-22Next ›